Welcome to meeting number 29 of the Standing Committee on Agriculture and Agri-Food.
I will start with a few reminders. Today's meeting is taking place in a hybrid format. The proceedings will be made available on the House of Commons website. Just so you are aware, the webcast will always show the person speaking, rather than the entirety of the committee. Of course, screenshots or taking photos of the screen is not permitted. Finally, I ask that members who are participating in the meeting in person follow the Board of Internal Economy's health recommendations.
Today, the committee is continuing its consideration of Bill .
We have three different witnesses here for our first panel.
Joining us by video conference as an individual is Mr. Jean Caron, professor, Laval University. Welcome, Mr. Caron.
From Équiterre, Émile Boisseau-Bouvier, climate policy analyst, is also joining us by video conference.
From the National Farmers Union, we have Glenn Wright, farmer and professional engineer, joining us by video conference.
Each of our witnesses is going to have five minutes. Obviously, we have the ability for English and French. You will see the toggle at the bottom of your screen.
I'm going to allow Mr. Caron to start. You will have up to five minutes, and then we'll go to questions.
Mr. Caron, it's over to you for up to five minutes.
Thank you very much to the members of the committee for inviting me to testify today. It is a pleasure for me to be with you.
I have provided two documents to the committee. The first is a letter written to Senator Robert Black this spring regarding land degradation and the need for monitoring. The second document is a PowerPoint presentation in which we provide our latest research findings.
I am speaking to you today as a researcher from Université Laval who works in the field.
There is one thing that I want to highlight in relation to the bill. In our document, we announced that agricultural soil compaction levels were reaching very high levels. Our study concerns Quebec, but we suspect that the same is true for eastern Canada, Ontario and, in some cases, for heavy soils in the Peace River and Fraser Valley areas. At the time of the study, we estimated soil compaction levels to be in the 30% to 90% range; we did not know the exact figures. However, our latest surveys in the major grain corn growing region of southwestern Quebec indicate compaction levels of about 80%.
Figure 5 in the PowerPoint presentation I sent to you indicates that, given the thresholds reached, denitrification could result in a loss of 10% to 60% of the nitrogen in the nitrogen fertilizers that are applied.
Through my testimony, I want to emphasize that it would be very relevant to encourage monitoring with respect to soil quality and compaction levels if we want to effectively combat denitrification, which is a major source of greenhouse gas emissions. In this case, taxation should instead be based, through concerted efforts, on improving soil quality.
That is the essence of the point I wanted to make today.
Mr. Chair, members of the Standing Committee on Agriculture and Agri-Food, good afternoon. My name is Émile Boisseau-Bouvier and I am a climate policy analyst at Équiterre.
Thank you for the opportunity to discuss Bill with you, as I was able to do alongside my colleague on Bill .
I will first say a few words about Équiterre. We are an environmental NGO that founded the Family Farmers Network in Quebec. In addition, we currently have a technology showcase project on health, soil conservation and regenerative practices. We have participated in the consultations for the next agricultural policy framework. Finally, we are working with producers, institutional buyers and policy-makers to implement solutions to build an agriculture that is more resilient and sustainable.
Of course, we also have expertise in climate issues. In recent years, we have defended federal jurisdiction over a carbon pricing system in the Supreme Court because we believe that a price signal is needed to guide individual and collective decisions.
We are also working on the issue of fossil fuel subsidies. If we are to meet our climate goals, Canada cannot continue to be the largest provider of subsidies and public support for fossil fuels in the G20.
Let's now get to the heart of the matter.
Bill essentially replicates former Bill with some clarifications regarding the use of fossil fuels to heat or cool a building that houses animals, or to dry grain. However, much has changed since Bill C-206 was originally introduced in February 2020.
First, since the passage of Bill , the government has been returning proceeds from the price on pollution directly to farmers in provinces that are subject to the federal safety net.
However, most importantly, Agriculture and Agri-Food Canada launched the agricultural clean technology program in 2021, which provides $50 million to help farmers purchase more efficient grain dryers and replace hydrocarbons. The program also focuses on research and innovation, particularly in the areas of green energy and energy efficiency. Ultimately, these are investments that will accelerate and facilitate producers' transition away from fossil fuels.
You will agree that Bill , passed last June, addresses the very real problem raised by Bill without weakening the principle of carbon pricing. This is an approach we encourage you to pursue and enhance, rather than the one presented to us today.
We agree with providing assistance to farmers, but we cannot agree with systematizing the erosion of carbon pricing mechanisms. The transition must begin quickly.
I want to take a moment to say that we understand the farmers who are experiencing increased stress owing to increasing extreme weather events and the current economic context. We suggest that they be helped financially by promoting sustainable alternatives. This is a potential solution that, again, already exists.
I would now like to remind you of Canada's commitments on fossil fuel subsidies.
Canada made a commitment in 2009 to phase out inefficient fossil fuel subsidies. It has since consistently reiterated that commitment in various international forums. Last year, the government moved the deadline for its commitment closer to 2023 instead of 2025. The year 2023 is just around the corner.
Bill , which is being considered today, proposes to exempt new fossil fuels and new activities from carbon pricing. If passed, the bill would artificially reduce the price of fossil fuels and increase their competitive advantage. In short, it would be another subsidy for fossil fuels, even as we have committed to eliminating them by next year.
In conclusion, while this bill is presented as a plan to help farmers, it instead creates conditions that are conducive to maintaining the dependence of agricultural activities on fossil fuels.
It is also a bill that, from my reading of it, would conflict with Canada's national and international commitments on fossil fuel subsidies.
Given the many advancements since 2020, it would be in the best interest of the agricultural sector, its operators and workers for this committee to quickly consider how to promote alternatives to fossil fuel grain drying and building heating. We have an opportunity to help transition the sector away from fossil fuels; this opportunity should not be missed.
Thank you for your time. I will be happy to answer your questions.
Thank you for inviting the National Farmers Union to provide submissions to committee here today.
My name is Glenn Wright, and I have been an active member of the National Farmers Union, or NFU, since 2017. I supported my farm with off-farm income by working first as a professional engineer for 15 years, and now as a lawyer. My wife and I operate our grain farm near Vanscoy, Saskatchewan.
NFU policy positions are developed through a democratic process of discussion and debate by members at regional and national conventions.
The harvest of 2019 on the Prairies was referred to as the “harvest from hell” because nearly all the grain taken from the fields was either tough or damp. There was significant grain spoilage for many producers, including my farm, and grain drying required far more energy than expected that fall.
As a result, at the 50th annual convention of the NFU in November 2019, NFU members passed a policy resolution that requested that the federal government provide a rebate of the carbon levy on farm fuel used for grain drying. NFU members could not understand why grain dryer fuel was not treated the same as tractor fuel in the Greenhouse Gas Pollution Pricing Act, which hereafter I will refer to as simply the pollution pricing act.
Since the passing of that NFU resolution, recent changes made by Bill introduced a tax credit to return fuel charge proceeds to farming businesses where the pollution pricing act federal backstop applies: Alberta, Saskatchewan, Manitoba and Ontario. The NFU believes that the amendments introduced by Bill C-8 were a step in the right direction, and the NFU urges the committee to be cautious with respect to further changes proposed with Bill .
The NFU worries that Bill proposes to create a complete exemption for farm heating fuels, which would entirely remove the pollution pricing signal currently provided by the pollution pricing act. Pollution pricing signals are important because they encourage producers to find and implement lower-emissions practices to heat our barns and dry our grain. The current system, as modified by Bill , is now striking a better balance as it retains the pollution pricing signal without threatening food production.
The problem with Bill is that a complete exemption does nothing to encourage clean technology and low-emission alternatives. The exemption proposed by Bill may have been more sensible when the pollution pricing act was first drafted, but it becomes less appropriate as clean alternatives are available.
The growing body of climate science information regarding dangerous climate change requires an urgent policy response. In the context of Canadian agriculture and Bill , the following points must be considered.
Number one is that greenhouse gas pollution must be reduced as fast as possible. There are no easy, cost-free ways to accomplish this task. In our capitalist market-based economy, pollution price signals are important for all players, including farmers.
Number two is that adequate supplies of food must be maintained. The pollution pricing act reflected this and exempted most farm-used fuel from pollution pricing.
As for number three, the NFU was disappointed that farm-used grain-drying fuel was not included as farm-used fuel in the pollution pricing act. Bill has improved the situation regarding fuel used for grain drying while still providing some pricing signal to reflect the cost of ongoing pollution.
The NFU recommends that the government continue to assist farmers to transition to better practices by providing incentives for farmers to purchase more efficient grain dryers and improve livestock facilities, and that it continue using the pollution pricing act to provide price signals for farmers regarding the costs of pollution where possible.
Specifically with respect to Bill , the NFU recommends that this committee amend Bill C-234 to include a sunset clause for the exemption that would treat grain-drying and barn-heating fuel as farm-used fuel. The sunset period would provide time for clean grain drying technologies to mature and provide time for farmers to retrofit farm building insulation and heating systems to decrease greenhouse gas emissions from their farms.
Subject to any questions, those are our submissions from the NFU today.
The point of my remarks today was, in a way, to say that it is laudable to try to tax nitrogen, for example, so as to attempt to reduce its use, but it is also important to understand that the more compact the soils are, the more fertilization, and in particular nitrogen fertilization, is required to sustain production. This is due to the phenomenon of nitrogen loss from a lack of oxygen in the soil owing to compaction.
To answer your question more specifically, I would say that research efforts have not been sustained in the past. There was a lot of effort in the 1980s and into the mid-1990s. After that, the teams were virtually all disbanded.
Thanks to all the witnesses for being here today. I'll start with Émile Boisseau-Bouvier.
In your opening remarks, you expressed some concern about removing the price signal from the price on pollution within the agricultural industry, certainly for these on-farm fuels for grain drying and for heating and cooling.
Is your concern that if we remove that price signal, we'll essentially be removing the incentive to make the change to renewable energy on the farm?
If I may, I'll speak in French, just to make sure I get all the nuances.
If we remove this price indicator, it will be a way to favour fossil fuels. As I said in my speech, it will be a form of subsidy for fossil fuels that will make them more competitive with alternatives that are favourable to us all, that are sustainable and that will achieve Canada's climate and environmental objectives. We need to maintain a strong price signal, otherwise we will never be able to accelerate this transition.
I would say that the issues associated with grain drying and building heating are two separate things, with technology at different states of readiness. We know how to heat and insulate buildings in a manner that reduces emissions significantly, and I've demonstrated that personally by retrofitting our farmhouse and reducing the energy consumption there by 83%. We made the decision to disconnect from our fossil fuel gas connection.
What farmers really need, though, is assistance to retrofit their barns and improvements to the building codes to require high-performance insulation and ventilation with heat recovery. The technology is ready now, but it is not normalized for livestock facilities. It is probably only becoming mainstream in residential and commercial construction as we speak.
With respect to grain drying, though, the technology is in a state of maturing. We can provide a heat source with heat pumps, but the problem is that grain drying is an intermittent need and it takes a very high energy demand. If we were to decarbonize the electrical grid, I see it being very possible to use a heat pump to provide that heat source to supplement the air as you're drying your grain. It's just a matter of the technology needing to mature.
Just in view of time, I'll try to sneak one more question in there.
Mr. Wright, you talked about a sunset clause being important. In terms of the technology being at different stages, would you say, given the innovation and where the grain drying sector is at in terms of adoption, that a sunset clause would be longer term or shorter term within that area, as compared to heating and cooling a building? I think this is being demonstrated across Canada as homeowners retrofit their homes with air source heat pumps and solar panels, etc., through the Canada greener homes grant program.
Could you speak to the different timelines?
I'd like to thank the witnesses for being with us.
Mr. Boisseau‑Bouvier, you said earlier that we need to keep a strong price signal to encourage the transition. We all agree with that. However, when it comes to grain drying, several witnesses said during the study of Bill that we don't have economically viable alternatives at this time.
Are you aware of any economically viable alternatives to propane, especially for grain drying?
Thank you very much, Mr. Chair.
Thank you to all of our witnesses for appearing today.
I'll start with Mr. Boisseau-Bouvier.
We are spending a lot of time talking about the bill before us, which is Bill , but I want to talk about the parent act.
The statute that this bill is amending is the Greenhouse Gas Pollution Pricing Act. When that bill was originally drafted and duly passed by the Parliament of Canada in 2018, I believe, it already included definitions of a qualifying farm fuel, an eligible farming activity and eligible farming machinery.
You've been talking about how it's wrong and that Bill is heading in the wrong direction because it's sending the wrong message. Do you have an opinion on the original exemptions for farming activities that were included in the parent statute?
What is your opinion on the fact that farmers can buy diesel for their tractors and not have to pay a surcharge on it because there is no viable alternative? Do you have an opinion on the provisions that are already in the parent statute?
Mr. Wright, I'd like to turn my next question to you.
In my time on the agriculture committee—it's been four and a half years now—I hear repeatedly from farmers themselves who say that they are on the front line of climate change.
You've already referenced the harvest from hell of 2019. Look at what happened to my province of British Columbia last year. Months apart, we had wildfires and then devastating floods, which basically cut off the port of Vancouver from the rest of the country.
I'd like you to add to this conversation by setting the table about the inflationary impacts of climate change. This is the crossroads we're at right now. It's not only trying to deal with some relief for farmers; we also need to talk about the broader costs that are being incurred as a result of climate change.
Perhaps you could spend maybe a minute setting that up for the committee.
Yes. Thank you. I'll do my best.
It's so overwhelming, when you think about it. I mean, farmers depend on the weather, particularly where I'm from in the Prairies. Without irrigation, we really depend on adequate moisture to water our animals and to grow our crops and to protect us from fire. We've had such dry conditions since that harvest from hell. We've been threatened with grass fires. The high winds and dry conditions can make it downright scary to live where we are. My heart goes out to the people of B.C. and what they faced last year, certainly.
There's no doubt in my mind that change is only accelerating for us with respect to our environmental conditions. Some of that is largely driven by human activity. If we don't recognize that what we're doing has consequences, then I'm afraid we're not going to have time to react. It behooves us to make changes right now, not only to adapt but also to mitigate and stop making the problem worse. I think that's why these changes are so urgently needed.
I would say to your former question about the price signal with respect to diesel fuel for tractors that there is a benefit for all sectors to have pricing signals. The trouble with tractors right now is that we don't have an alternative, but you cannot impact what you're not tracking, so as you exempt people from any pricing signals, it prevents us from tracking it. That takes away the motivation to create those technology solutions that we desperately need.
I appreciate your comments on the sunset clause. That's certainly what our committee explored when we reported Bill back to the House in the previous Parliament.
You have already talked about the state of technology. We know that it's developing, and we certainly heard from a number of witnesses in the previous Parliament that it is not yet commercially viable.
There's a new addition to this bill in “property used for the purpose of providing heating or cooling to a building or similar structure, including those used for raising or housing livestock”. I understand that you may think a sunset clause on that might be viable, but what do you think about the current language of it? Do you think it's open to too much interpretation in the number of buildings that could qualify?
I'd like to thank the witnesses for their testimony today.
I want to begin with the statement from Mr. Boisseau-Bouvier that what's contemplated under Bill would become a de facto subsidy for the oil and gas sector. I must admit that I fail to see how the addition of a tax, and then the potential removal of that tax, becomes a subsidy. That's logic beyond my head. I just want that on the record. From what we're hearing from farmers, grain farmers in particular, they're getting cents back on the dollar that they're spending on this carbon tax on grain drying and barn heating. I wanted to start by putting that on the record.
I'd like to direct my first question to you, Mr. Wright, please.
With the greenhouse pollution pricing act of 2018, the government did grant the on-farm fuel exemption. With respect to barn heating and grain-drying fuels, do you think that was an intentional policy decision or an oversight?
Thank you very much, Mr. Chair, and thank you to the witnesses for being here today.
I found the discussion very interesting. Thank you, Mr. Wright, for your viewpoint as a farmer.
I think this bill was initially introduced.... Obviously we're concerned about the economic welfare of our farmers and their ability to manage with all the increasing costs. Mr. Epp has spoken about extraordinary years when there are real challenges. Do you feel these kinds of exemptions or rebates should be tied to hardship?
I notice that in 2021, Statistics Canada reported that farms had very healthy incomes; in fact, their revenues increased despite the increasing prices of inputs. I'm wondering, given that fact, whether you feel this should somehow be tied to need as opposed to a blanket exemption.
I believe we need some time.
The problem is twofold. You have the issue of new construction and the issue of existing buildings. With respect to the new construction, what we need more than ever is to modify the building code. The building code is woefully inadequate for our climate and not focused on energy efficiency as much as it could be. The technology is ready.
With respect to existing buildings and infrastructure, farmers need help to do that work. It's a large undertaking to retrofit a barn to be much more airtight and insulated and to have heat recovery ventilation. There are probably going to be unique heat recovery ventilation issues that arise with the dust and contaminants that are in livestock facilities that aren't seen in a shopping mall, for instance.
I'm not suggesting there's a silver bullet ready here, but we know how to do it. The engineering principles are sound, but farmers need assistance to do it.
I think there's a big parallel here with respect to drying grain. It's much like our fertilizer program. In the fertilizer realm, we're talking about four R's—the right place, the right time, the right placement....
With respect to grain drying, it is very critical to focus on psychrometrics. It's all about air temperature and relative humidity, because as you're moving air through the grain, it has to be at a lower relative humidity to pull moisture out. I don't think many farmers understand yet that it's the same type of principle here. You have to use the right air source at the right time in order to conserve power and have the lowest energy bill possible.
We could do a lot of things in terms of passive drying and passively collecting heat from the sun. A little experiment I did on the farm was to just heat the air using the sun before it went into the aeration fan rather than using any propane or other supplemental heat. By doing so, I was able to lower the relative humidity of the air going through the grain.
There are options; we just haven't been thinking about them.
Mr. Wright, I know the NFU has written extensively about the high-input, high-output farming model, and also about the state of farm debt, which has gone up considerably over the last 20 years on Canadian farms. Ultimately, Bill is trying to tackle one small part of the price of inputs that farmers have.
I've always been amazed at the ingenuity and innovation that exists in Canadian farming activity. Do you have any examples you can share with the committee of how farmers are really leading the way in trying to reduce their input costs, because that's such a huge part of farming and it really affects their balance sheet?
Could you provide some examples, and examples of where you think the federal government should be doing more to build upon that kind of model that farmers are already leading with?
Yes. I'm one of those farmers, I suppose, who's experimenting and trying to do everything I can to reduce my risk and to be more ready for the extreme weather that's coming with climate change. I have been following some of the principles outlined by the NFU, largely focused on reducing my inputs. I've been trying to incorporate biological processes to provide my fertilizers.
I view farming as the start of a third revolution. The first one was mechanization. Then came chemistry with fertilizers and herbicides, and now we're just getting into the biological aspect. We're going to be looking at genetics to breed crops that might be able to fix their own nitrogen, or perhaps a perennial cereal crop so that we wouldn't have to seed it every year but continue to harvest it.
On my farm, yes, I've been employing intercropping and perennial cover to establish nitrogen in the soil and also to prevent erosion. I have reduced dramatically the amount of fertilizer that I'm applying because my back-of-the-napkin calculations show that this is the largest source of emissions on my farm. We're also trying to minimize how many passes we make so that we can use less fuel. Necessity is certainly the mother of invention.
Without pricing signals, though, farmers are still focused on yield. If we did have a pricing signal or output-based performance standards for our food, all those pollution prices collected on our food should be rebated to farmers on the basis of production to encourage these more sustainable food production methods.
Thank you, Mr. Wright. Thank you, Mr. MacGregor.
Colleagues, that ends our first panel today, but on behalf of all of you, I'd like to thank our witnesses. We had Monsieur Jean Caron from Université Laval, appearing as an individual; from Équiterre, we had Émile Boisseau-Bouvier; and from the National Farmers Union, we had Glenn Wright. Thank you so much for your testimony today.
Colleagues, please don't go far, because we're going to be turning to our second panel in just a few minutes. We'll see you shortly.
Colleagues, welcome back to the second hour. We'll get started. We're just a few minutes late, of course, because of the vote, so we send our apologies to our witnesses who have had to wait a few extra minutes.
Today we have three different panellists. From the Agriculture Carbon Alliance, we have Dave Carey and Scott Ross, who both serve as co-chairs and are in the room today. Welcome back, gentlemen. Again, you're no strangers to this committee.
From the Canadian Federation of Independent Business, we have Jasmin Guénette, who is the vice-president of national affairs. He is also in the room. We welcome Mr. Guénette and Taylor Brown, who is online and can answer any questions. They will be sharing the opening remarks.
We also have, from the Producteurs de grains du Québec, Benoit Legault, the general manager.
My understanding is that we have a little bit of a technical issue. We are working on getting Mr. Legault on the line, but I'm going to move forward and make sure that our witnesses are able to provide opening remarks.
We're going to start with the Agriculture Carbon Alliance for up to five minutes.
Gentlemen, I'll let you two share the time. It's over to you.
Thank you for the invitation to appear today on Bill .
My name is Dave Carey. I have the pleasure of serving as co-chair of the Agriculture Carbon Alliance, or ACA. I'm joined today by my fellow co-chair, Scott Ross. I will be sharing my time with him.
ACA is a first-of-its-kind coalition of 15 national farm organizations dedicated to working collaboratively on agri-environmental policy. Our membership encompasses major agriculture commodities, including seed, grains, oilseeds, pulses, cattle, sheep, pork, fruit and vegetables, dairy, forage and grasslands, and poultry. Collectively we represent more than 190,000 farm businesses.
A resilient driver of our economy, Canada's primary agriculture industry contributes more than $32 billion to our GDP, while the entire agri-food industry represents another $135 billion and provides one in nine Canadian jobs.
The ACA was established to ensure that Canadian farmers' sustainable practices are recognized through a policy environment that maintains their competitiveness, supports their livelihoods and leverages their critical role as stewards of the land. Bill is a key policy priority for our members. They have been proponents of this bill since day one.
To remain competitive and environmentally sustainable, farmers increasingly need capital to invest in innovations that drive efficiencies, reduce fuel use and implement best management practices in their operations.
Currently farmers pay a carbon price for utilizing natural gas and propane for on-farm practices that are essential to food production. These practices include grain drying, heating and cooling of livestock barns and greenhouses, feed preparation and steam flaking, and irrigation. With no viable alternatives, pricing these activities does not provide the adequate signal to lower emissions from these energy sources.
Bill allows farmers the capital to make the investments on farm that will drive energy efficiencies and support practices that will help the environment, including energy-efficient grain dryers, precision agriculture technologies, anaerobic digesters and solar panels. Investments in these technologies can cost hundreds of thousands of dollars. Where no alternative exists, carbon surcharges pull capital away from these critical investments that would augment the sector's potential to further reduce emissions.
It's over to you, Scott.
Exemptions are, simply put, the best option. Unfortunately, the carbon price rebates for farmers contained in Bill do not adequately respond to the breadth and variety of carbon surcharges applied to farms. Bill would provide a complete exemption for essential activities that lack viable alternatives and leave the money in farmers' pockets to make timely investments in their operations.
To support farmers in these efforts, Bill seeks to amend the Greenhouse Gas Pollution Pricing Act to extend the exemption for qualifying farm fuel to marketable natural gas and propane. We view this as tidying up exemptions that should have been in place from the get-go when diesel and gasoline used on farm were exempted.
Farmers and ranchers are climate solution providers, sequestering millions of tonnes of carbon, protecting biodiversity and grasslands and utilizing the latest technologies to reduce fuel and water use. Agricultural production has increased significantly while total emissions from the sector have been relatively stable for 20 years, resulting in a decrease of GHG emission intensity of 50% from 1997 to 2017.
Farmers and ranchers are stewards of the land, adopting the best environmental practices whenever possible. To be able to continue to invest in innovations, they need to remain competitive and have available working capital to do so. By adopting policies that enable them to remain competitive, producers will be able to further their investments and the sustainability of their operations, which will augment the sector's potential to further lower emissions and sequester carbon while feeding Canadians and driving our food exports.
Canada's farmers and ranchers are strong supporters of Bill and look forward to it being moved to committee stage for further discussion, debate and analysis.
Good afternoon, everyone. My name is Jasmin Guénette, and I'm the vice‑president of National Affairs of the Canadian Federation of Independent Business, the CFIB. I'd like to thank the committee for this invitation.
The Canadian Federation of Independent Business represents 95,000 members in all sectors of the economy and in all provinces. We have 6,000 members working in agriculture.
Of course, our farmers are an invaluable asset to our country. They work tirelessly to ensure we have the best food on our plates to feed our families.
We support Bill .
Farmers are currently facing skyrocketing operating costs. I am thinking, for example, of the high cost of inputs and fertilizers. In addition to these, the main cost constraints for SME owners are fuel and energy, insurance, and taxes and regulations.
Through Bill , elected officials have an opportunity to help our farmers deal with rising costs and invest in the future of their farms.
For the past several months, the level of optimism among farmers has been very low. Our survey, the business barometer, shows that the agricultural sector is the least optimistic about the future. Rising costs, such as fertilizer and taxes, supply chain issues, bureaucratic and regulatory red tape, labour shortages and Internet access issues in rural and remote communities all make being a farmer very difficult.
Our farmers want to protect the environment. The land is their livelihood. Ninety per cent of our farmer members farm primarily for personal reasons, and almost two‑thirds farm for economic reasons as well.
In a recent survey we conducted of our farmer members, 82% of respondents said that the federal carbon tax had a negative impact on their business. The carbon tax reduces their financial ability to make technological investments to reduce emissions and improve the environmental performance for their farm. Our members tell us that applying the tax to propane and natural gas punishes farmers for using products where there are no widely available and affordable alternatives.
CFIB members support Bill . We recommend that the committee support it as well. In doing so, you have the opportunity to send a clear message to the agricultural sector that you recognize its challenges in terms of costs and the key role it plays in Canada.
While the current federal carbon tax includes exemptions that apply to fuels used for agricultural purposes, farmers are facing major cost increases and rising prices for propane and natural gas. This bill provides exemptions for propane and natural gas used for on‑farm grain drying and barn heating, for instance. The exemptions in the bill are crucial. Bill will help support the health and growth of Canada's agricultural sector.
Thank you. It will be a pleasure for me and my colleague Ms. Taylor Brown, who is with me today, will be pleased to answer your questions.
I thank the committee for the invitation to appear today.
My name is Benoit Legault and I am the general manager of the Producteurs de grains du Québec. Our organization represents 9,500 grain producers from all regions of Quebec. These producers cultivate more than 1 million hectares of land, generate a turnover of $1.5 billion and create nearly 20,000 jobs.
First, it is important to say that agricultural fuels represent a significant burden for a grain farm. For a typical farm with 200 hectares of corn and 200 hectares of soybeans, this represents a bill of almost $108,000 in 2022, up from $60,000 in 2019. So that's an increase of almost 80%.
Propane accounts for nearly 60% of energy costs for corn and 7% for soybeans. At over $36,000 per year for a typical farm, propane is therefore a significant energy cost item.
As you know, Quebec has a greenhouse gas policy based primarily on a cap-and-trade system for greenhouse gas emissions. The latest offers were between $25 and $78 per tonne of carbon, averaging $40 per tonne. The federal tax has been $50 a tonne since April 1, 2022, and is set to rise to $167 a tonne by 2030.
Quebec carbon credits mean a carbon cost of over $9,000 for a farm, of which nearly $4,000 is associated with propane. Should the cost of carbon in Quebec follow the trend of the federal tax, these carbon costs would rise to $38,000 and $16,000 respectively, in the specific case of propane.
Through a previous exemption, the federal government recognized that the carbon tax on farm diesel was not useful and was not the best way to achieve the desired results. The fact that agricultural producers are already well engaged in good practices to enhance soil health and lower net greenhouse gas emissions probably contributed to this. It is still very clear to us that this tax on farm diesel could only be counterproductive in this regard.
Thus, Quebec's agricultural producers believe that this tax is equally counterproductive in terms of the energy needed to dry grain. This is an essential operation carried out on the farm in order to preserve the quality of the grain and to allow for a gradual and structured sale throughout the year.
It must be remembered that there is no other cost-effective energy or technology for drying grain and that the tax only increases the cost of production, undermines the competitiveness of grain production businesses and impedes the ability to invest in beneficial practices to reduce greenhouse gas emissions. Consequently, this exemption will be very beneficial economically for farms, but also for the environment in general.
I would like to remind you that grain producers in Quebec and Canada have been investing for decades in improving their practices in order to be ever more efficient and to gradually but surely lower their environmental footprint. Practices have changed dramatically since then.
The producers I represent ask me to reiterate that sustainable production also has an economic component, namely maintaining competitiveness, profitability and transferability from the farm to the next generation. It is therefore important that any regulatory framework be adjusted so as not to harm the economic reality of the farm and its ability to pursue its process of continuous improvement of agri-environmental practices. A large body of literature in the agricultural field states that success in adopting good agricultural practices depends very much on incentives and substantial investment.
Grain farmers, their multi-generational heritage and livelihoods, have a front row seat to the impact of climate change. They want to be part of the solution and have even committed to net zero emissions by 2050.
To get there, we need research, guidance and support for structuring investments. Regulation should only be used at the end of the road and must be well targeted and consistent. The imposition of a carbon tax on grain drying goes against this principle. It is therefore essential to promote this exemption. Indeed, the financial resources lost by grain production companies are resources not allocated to practices and technologies that are beneficial to the environment and that allow the reduction of greenhouse gas emissions.
These are the main messages that Quebec grain producers have asked me to convey to the committee today.
Thank you for your attention.
Just to put that in context, I think the NFU has about 3,000 members, and many of those aren't farmers. I just want to put that in the context of the groups in this panel who are saying that their members are very supportive of Bill . I just want to ensure that we have this in context.
Mr. Carey and Mr. Ross, we've been hearing a lot today that if there wasn't this carbon tax on grain-drying and the heating and cooling of barns, there would never be any innovation, technological advancements or emissions reductions. Is that a fair statement?
Mr. Guénette, the other argument that we've had from some witnesses is that Bill is redundant because of the Liberal Bill , the carbon tax rebate on farms. However, we had Finance Canada here in a previous meeting, and they're saying the average farmer gets about $800 back through the rebate. Many witnesses have said that's pennies on the dollar in terms of what they're actually paying.
CFIB did a study last year that showed the average farmer was paying about $45,000 in carbon tax. Are those numbers correct, and does that show the discrepancy in what farmers would be getting back through the carbon tax rebate compared to what they're actually paying in the carbon tax?
Currently for oilseed and grain drying and for the heating and cooling of livestock barns, there just isn't another technology commercially available at any sort of scalable, economically viable level.
As for a rebate versus an exemption, farmers during the season need to be able to invest in their operations. When they actually have more money on the farm, they make more investments.
These days, the average combine to harvest your crop is now over $750,000. Those were major capital investments if you made them, but there's no alternative to natural gas and propane at a scalable, economically viable level.
I think it's very hard to create a taxation policy like this that actually applies to sensitivities on-farm, and farmers, as has been alluded to by my colleague at the CFIB, are getting pennies on the dollar back. As well, the turnaround time is 18 to 24 months down the road, as opposed to having the working capital that they need throughout the year.
During the harvest for grains right now, they're running their grain dryers 24 hours a day. These are not small dryers of the kind we think of for laundry; these are sometimes 100 feet tall and 50 feet wide, running continuously for the duration of the harvest in September, October and November.
The grain bills are $20,000 or $30,000. They might get a few hundred dollars back a year, 18 months or 24 months from now. It does not allow them to make any adjustments on the farm when they need to during the year, when cash is more difficult to come by.
I don't know if your question addresses....
I'll do it in French. It's going to be easier for me.
I imagine your question is mostly about Quebec. As you know, in Quebec we have a particular situation. We have a credit system and we are not covered by the federal tax, so this exemption, in the short term, affects us less. However, it will affect us more in the medium term, because the gains we will make in terms of tax exemption for agricultural fuels will allow us to obtain the same flexibility on the Quebec side.
So that is why we are here today. We support a principle that has just been talked about a lot, which is that we have to do things the right way, in a coherent and useful way. This is not what is being done at present by applying the carbon tax to propane. We are here to talk about this principle. Once this exemption is applied nationally, obviously, we will try to transpose it here in Quebec for agricultural fuels that are not yet covered by the exemption.
I will speak about my sector. The issue of heating buildings is perhaps less important in our case than it is for livestock buildings. The buildings used for grain production are hangars. Of course, the conversion is probably easier. Heating the buildings is certainly not the biggest burden for grain farms.
The challenge with buildings, in the case of grain production and drying, is that you have a high energy requirement in a short period of time. We are talking about electricity, for example. One day, it may be possible to dry grain with electricity, but we are still far from this technology. Even then, the electrical system will have to provide access to the necessary electricity. In many parts of Quebec, we don't even have access to three-phase electricity. We are talking about a very large electrical load or energy load that only propane and natural gas can currently provide.
So, technologically, we're not yet able to dry grain in any way other than using the fuels.
I think that when we look at heating or cooling buildings, we need to be very clear that those would be livestock buildings and greenhouses. There's no intention, I think, in this legislation to consider housing costs or the heating and cooling of homes.
Infrastructure has to take into account that Canada's a very big country. In many provinces, we simply do not have alternatives to natural gas or propane. Electrification does work, but even most homes are still heated by natural gas and propane. I think we are still some distance away from having an economically viable, scalable alternative to natural gas and propane that would work across Canada as a whole, and this is federal legislation that we're discussing.
Mr. Guénette, upon examining the issue, we realize that there are no viable alternatives in the short term. However, there could be innovation and research.
You said earlier that you wanted an exemption rather than a reimbursement, because reimbursements are partial and complex to obtain, most of the time. Indeed, we know how much paperwork there is when dealing with the government, whether it's the Canadian government or someone else. I say this without judgment.
How do we maintain the message that we need to reduce the ecological footprint? The idea of pricing pollution is an important and promising one. How do we keep the message alive?
Would a sunset clause be a viable compromise?
I will respond. If my colleague Ms. Brown then wants to add something, I will invite her to do so.
First, we support the idea of a sunset clause. We have suggested a sunset after 10 years, if that will help get Bill passed and help our farmers. We must find a way to help them deal with the skyrocketing costs they are currently facing, whether for fertilizer, energy or inputs of all kinds.
As far as environmental habits go, I have to say that farmers are some of the biggest environmentalists you can find. These are people who make their living working the land. My own grandfather was a farmer. I can tell you that farmers are still people who take care of their land. It is by empowering our farmers to invest in new technologies, whether it is to improve their facilities or to make any other environmentally beneficial changes, that we will really help them to further reduce their environmental footprint. As I said in my testimony...
Thank you very much, Mr. Chair, and thank you to all of our witnesses.
Mr. Carey and Mr. Ross, I think I'll start with you.
We, of course, are talking a lot about Bill , but I also want to look at the parent statute, the Greenhouse Gas Pollution Pricing Act that it is seeking to amend. I was present in the 42nd Parliament when that statute became law. It was part of a budget implementation act.
When the Liberal government drafted that bill, they took the time to include definitions of qualifying farm fuel, of eligible farming activities and of eligible farming machinery. Why do you think they took the time to include those provisions in the parent statute?
When it comes to grain drying, in my day job our 43,000 canola farmers would love it if they could use electricity. It would be a cheaper alternative. I think what Scott alluded to is that we're certainly not opposed to the transition to more energy-efficient fuels on farms, or renewable fuels.
Electrification is a massive discussion and a massive undertaking. It certainly speaks to discussion in the earlier round on what powers that electrification. We're talking about the infrastructure across Canada. We are a huge country that swings from -40° to plus 35° from winter to summer.
There certainly are more energy-efficient tools that we're interested in. Farmers are currently struggling with the capital to invest in technologies that exist now. If they need to find the capital to invest in the next wave of technologies.... They need the working capital on farms so that they're economically sustainable.
We're certainly not here to say that we don't want to help see that transition. That transition will take time. In the meantime, we have a lot of food to grow here in Canada.
It's more like silver buckshot.
Voices: Oh, oh!
Mr. Alistair MacGregor: This is my final question.
I live in British Columbia, so this conversation that we're having is not going to really impact me, but I am curious. B.C. is not known as a major grain producer, but we do have the Peace region. I think there are roughly 380,000 acres in grain production up in the Peace region.
Bill made it to the doorstep of the Senate in the previous Parliament. If Bill goes the distance and we see this actual change to the federal legislation, what's your understanding of how that will impact provinces that don't fall under the federal...? Will it have some spinoff effects in B.C.?
Thank you, Mr. Chair. I will indeed be sharing my time with my colleague Mr. Falk.
I thank the witnesses for being here today.
My first question is for Mr. Legault.
Some witnesses from the previous panel told us that electricity could be an interesting avenue for drying grain. Of course, we understand that a three-phase network is needed to achieve energy efficiency.
Your association represents 9,500 Quebec producers. How many of them would have access to the electrical devices needed to dry grain? Has this research been done by the Producteurs de grains du Québec?
Thank you, Mr. Lehoux, and thank you to all our witnesses for coming.
I am going to talk to the Agriculture Carbon Alliance folks a little bit here.
When the Greenhouse Gas Pollution Pricing Act was adopted for whatever reason, there was a specific carve-out for diesel and gas for agriculture. I think it was a recognition of the importance that we as Canadians place on our food supply, on our food chain, on agriculture and on the important work that farmers do.
We know that for whatever reason, there was an omission, whether intentional or inadvertent. A sector of our farm community was not included, and that includes the folks growing livestock and also the people irrigating their fields and drying their grain.
I live in Manitoba. It gets to -35°C below there. I know that a broiler farmer empties out his barn every five weeks, and it sits empty. He washes it. He cleans it. He disinfects it, and he gets ready for the next batch. When those chicks come in there on day 1, do you know the temperature that the barn needs to be?
I would like to think that our farmers are smart. I know lots of them, and I don't know of one farmer, at least in my riding, who unnecessarily spends money on fuel. They're best-practices producers, and I think your support of this bill is very admirable.
When I look at the numbers that you've indicated here, I see that as a conglomeration, you represent over 200,000 producers. I think your voice is loud and clear that this is a bill you want to see move forward. Have I interpreted that correctly?
Thanks, Mr. Chair. It's good to be back on AGRI and to see a lot of familiar faces around the table as well.
I want to start with Agriculture Carbon Alliance and possibly move on to the other witnesses. Thank you all for being here.
I visited a farm in Listowel, not too far from Guelph, where a woman created a small business around using a press to take the oil from oilseeds. She has converted her diesel using an add-on to her injection system, which she buys from Switzerland, to create electricity using the biodiesel that she gets from the oilseeds. She takes the dry seeds and makes what she calls “nutrigrain bars for cattle,” a very high-protein, high-density feed for cattle. She also uses the oil to feed boilers, and she also takes some of her hydraulic oil and other oil to heat the barns.
She created a business around making her farm more sustainable and is now selling those solutions to other farms around her. Have you looked at the small business opportunities that pricing signals give the market?
The company's name is Energrow. You can look them up.
In the larger context, I'm wondering whether your association works in other countries or has associations with other associations in other countries that have had high fuel costs, higher than in North America.
I'm looking at the RIELA stationary dryer system from Germany. It's a two-scale system. It does 120 tonnes per hour for grain, with 4% moisture removal, and up to 18 tonnes per hour for maize, with 20% moisture removal. It's a scaled system that looks like it could be put on any feed lot or any silo system anywhere in Canada.
Germany seems to have some technology they've developed. I've heard the argument today that there are no other technologies out there, but they're using biofuels to do the drying.
There's another one in England, Alvan Blanch from the U.K., that's using airflow systems that were mentioned in the last panel.
Then in Saskatchewan we have Assié dry air grain drying using finished alfalfa pellets for seven to 10 tonnes per hour. That's a little bit less volume, but it's still viable for many farms.
How do we tie the innovations in other countries into Canadian innovations that could then look at the price signals the market is getting, indicating that there's actually an economic opportunity here?
It's fantastic to hear about this technology. I would hope that if it were viable for Canada, the wait-list wouldn't be too long, because currently farmers can't buy new technology because there is no supply of it.
In Canada, most farmers who have a grain dryer have done as many upgrades as they possibly can. We saw the $50 million announced for grain dryers. There are approximately 50,000 grain dryers across Canada. The average grain dryer is $100,000 pre-cement in the Prairies, so that entire thing could do about 500 grain dryers. There's also just a lot of infrastructure already in place. For farmers to invest in that, they need the money in their hands, or support from government.
There's also no one size that fits all. If these work for their farm, farmers will go that route if they have the economic means to do so.
On farm, I'd say the pricing signal is there.
To be clear, even if Bill were passed, farmers are not made whole from carbon pricing. The second carbon pricing goes up, every year the cost of custom-haul trucking, freight, their inputs and the rest of their day-to-day expenses go up. We're simply asking for an exemption for on-farm food production.
The pricing signal, we feel, is already there. Farmers are not using inputs unless they have to. It is simply too expensive. The costs that we face as suburban or urban Canadians are nothing compared to what a 6,000-acre farm in Saskatchewan faces.
The price signal is philosophically very important for this regime. Farmers are already facing that. This is about just food production, not the rest of their lives outside of primary food production on farm.
I want to continue on the same line of questioning.
One of the big differences between Bill and the previous bill, Bill , is the addition of a new paragraph 1(1)(b.1) that defines “eligible farming machinery” as:
property used for the purpose of providing heating or cooling to a building or similar structure, including those used for raising or housing livestock;
When I first read this, it seemed to be fairly vague.
Mr. Carey, I think you mentioned earlier that you definitely want to see greenhouses and livestock mentioned. Do you think the wording could be tightened up a little bit in this particular section?
Thank you to our witnesses.
To Mr. Carey, to Mr. Ross, Mr. Guénette, Madam Brown, and Monsieur Legault, thank you very much for providing important testimony today on Bill .
Colleagues, just before we break, I want to give you a bit of an update in terms of what we're planning to do on Wednesday. We do have three individuals who have been confirmed. We have Ghislain Gervais, president of the Sollio Group; Dennis Prouse, vice-president of government affairs with CropLife Canada; and Mark Thompson, executive vice-president of Nutrien, all of whom have confirmed.
It is no secret that Mr. MacGregor has certainly introduced the concept of a new study. Mr. Perron has given us notice of a particular motion that he might like to move, and Mr. Lehoux would like to be able to move a motion as it relates to in this committee. I've asked those three gentlemen not to move their motions today so that we didn't have to disrupt this meeting, but we are going to set aside one hour on Wednesday. It will be a public forum. If the committee chooses to move in camera, that's their choice, but it will start as a public meeting to discuss those motions. It will be committee business so that we can deal with those motions without disrupting the rest of our preprogrammed schedule. It will be for the benefit of our witnesses.
Colleagues, that's just a sense of what's going to be happening. We will let you know whether the witnesses will be in the first hour or the second. Our desire is to have them in the first hour so that we could move to committee business in the second to discuss the motions that are intended to be moved at that time.
Thank you, everyone.
The meeting is adjourned.